SECTION 8 - INCOME OTHER THAN EARNINGS

General

What is income?

8.001 A resident's resources are either capital or income. It may not always be obvious whether a payment should be treated as capital or income, but generally, a payment of income is one which:

a) is made in respect of a period; and

b) forms part of a series of payments (whether or not payments are received regularly)

8.002 A payment of income is taken into account for a period equivalent to that which it represents, eg a payment due to be made weekly is taken into account for a week, a payment due to be made calendar monthly is taken into account for a month, but a weekly rate is calculated before assessment. Guidance on the attribution of income to a specific period is in Section 9.

Treatment of income

8.003 Income is treated in one of three ways:

a) taken into account in full;

b) partly disregarded; or

c) fully disregarded

8.004 Paragraphs 8.005 to 8.058 below list the types of income in each category, and provide further details where necessary.

Income taken fully into account

8.005 The following types of income are taken into account in full:

• Most Social Security benefits (8.006)

• Annuity income (except home income plans) (8.013)

• Cash in lieu of concessionary coal

• Child Support Maintenance payments where the child is accommodated with the resident under Part III of the National Assistance Act 1948 (see 8.038 for other cases)

•

• Home Office ex gratia incapacity allowances

• Income from certain disregarded capital (8.015)

• Income from an insurance policy (except mortgage protection insurance) (8.016)

• Income from certain sub-let (8.017)

• Occupational Pensions

• Refund of income tax

• Third party payments made under an agreement to meet excess fees (8.018)

• Trust income (see Section 10)

• War Orphan's pension

Reg 15(1)

Social Security benefits

8.006 The Social Security benefits listed below are taken fully into account. However see 8.042A for the treatment of certain dependency increases.

• Attendance Allowance (AA)/Disability Living Allowance (Care Component) (this also includes any Constant Attendance Allowance (CAA) and Exceptionally Severe Disablement Allowance (ESDA) payable with Industrial Injuries Disablement Benefit or War Disablement Benefit) paid to permanent resident see 3.014 for treatment of AA/DLA (Care) paid to temporary residents.

• Child Benefit where the child is accommodated with the resident under Part III of the National Assistance Act 1948 (see 8.038).

• Disability Working Allowance

• Family Credit

• Guardians Allowance

• Job Seekers Allowance

• Housing Benefit - where the resident has been admitted permanently into unregistered accommodation or local authority accommodation not providing board so Housing Benefit is being paid to meet the accommodation charge.

• Income Support (but see paragraph 8.043 for exception)

• Industrial Death Benefit

• Industrial Injuries Disablement Benefit (IIDB) (8.008) - see also above and 3.014 for treatment of CAA paid with IIDB

• Incapacity Benefit

• Invalid Care Allowance

• Maternity Allowance

• Pneumoconiosis, byssinosis and miscellaneous diseases benefit scheme payments (8.009) - see also above and 3.014 for CAA and ESDA paid with these payments

• Retirement Pension 8.010

• Severe Disablement Allowance

• Unemployment Benefit

• Widow's benefit widow's pension (WP) and widowed mother's allowance (WMA)) (8.011). See Section 6 (Capital) for treatment of widow's payment (WPT)

• Workmen's compensation (8.012) - see also above and 3.014 for treatment of AA/CAA paid under the Workmen's Compensation Act

Reg 15(1)

Deductions from benefits

8.007 Where any Social Security benefit is being subjected to a reduction (other than a reduction because of voluntary unemployment) eg because of an earlier overpayment, the amount to be taken into account should be the gross amount of benefit before reduction

Reg 15(3)

Industrial Injuries Disablement Benefit (IIDB)

8.008 Industrial Injuries Disablement Benefit is taken fully into account. However, some additional allowances may be paid with IIDB. These are:

a) ESDA (Exceptionally Severe Disablement Allowance);

b) CAA (Constant Attendance Allowance); and

c) REA (Reduced Earnings Allowance)

ESDA and CAA are fully disregarded (see 3.013). REA is taken fully into account.

Pneumoconiosis, byssinosis and miscellaneous diseases benefit scheme

8.009 These payments are made to people who are not entitled to workmen's compensation (8.012) or IIDB (8.008). They are taken fully into account. AA may be paid with these payments - see 3.014.

Retirement Pension

8.010 Retirement Pension may include various additions and increases, all of which are to be taken into account in full. AA may be paid with RP see 3.014 and 8.006 for treatment of AA.

Widow's benefit (Widow's Pension (WP) and Widowed Mother's Allowance (WMA))

8.011 A widow may be entitled to WP or WMA. Both are taken fully into account. Widow's Payment (WPT) may be paid in addition to WP or WMA. WPT is paid as a lump sum and is treated as capital.

Workmen's compensation

8.012 These payments are awarded for industrial injuries and diseases resulting from employment before the IIDB scheme started. AA may be paid with workmen's compensation - see 3.014 and 8.006 for treatment of AA.

Annuity Income

8.013 An annuity is a fixed sum payable at specified intervals (normally annually), in return for a premium payable either in instalments or as a single payment. The annuity income is payable for a specified period, such as the recipient's lifetime.

8.014 Income from an annuity is to be taken fully into account except when the annuity is:

a) purchased with a loan secured on the resident's dwelling (partial disregard - see paragraphs 8.025 to 8.030);

b) a gallantry award eg Victoria Cross Annuity, George Cross Annuity (fully disregarded - see paragraph 8.043); or

Income from certain disregarded capital

8.015 Income from capital will generally not be treated as income (see 6.041). However, income which comes from certain forms of disregarded capital is taken fully into account as income for as long as the capital is disregarded. This will be the case where the capital is:

• the normal dwelling of a temporary resident (but see 3.011 for disregard of income needed to cover housing commitments)

• business assets which the resident is taking steps to dispose of

• any capital held in trust which is as a result of a personal injury

• a dwelling which the resident intends to occupy as his home and which he is taking steps to occupy

• the former dwelling of the resident which is occupied by a partner or a relative of the resident who is over age 60, under 16 and whom the resident is liable to maintain, or incapacitated premises belonging to the resident which are occupied in whole or in part by a third party, where the local authority are using their discretion to disregard those premises

• any premises which the resident intends to occupy as his home and in respect of which he is taking legal steps to obtain possession

• any premises which the resident intends to occupy as his home but which needs repairs or alterations in order for the resident to occupy

However, in the final five situations only, income which covers mortgage repayments, payments for water rates and council tax may be disregarded - see paragraph 8.037.

Schedule 3 para 14

Income from insurance policies

8.016 Any form of income from an insurance policy is generally taken into account in full. The only exception is income from a mortgage protection policy (paragraph 8.033).

Income from certain sub-lets

8.017 When a resident sub-lets a part of their property which is not part of the living accommodation, for example the garage or the garden, the income from that sub-let is taken fully into account. The treatment of income from other sub-lets is described in paragraph 8.031.

Third party payments made to meet higher fees

8.018 Where a local authority agrees to place a resident in a higher price home on the grounds that there is a third party willing to contribute towards the higher fee, the payments made by the third party should be treated as the resident's income and should be taken into account in full.

8.019 Other payments made by a third party should be treated in accordance with paragraphs 8.051 to 8.057.

Trust income

8.020 See Section 10

Income partly disregarded

£10 disregard

8.021 The following types of income attract a £10 disregard:

• Payments to victims of National Socialist persecution (paid under German or Austrian law)

Schedule 3 para 11

• Civilian war injury pension

Schedule 3 para 11

• War disablement pension (8.023) - see also 3.014 and 8.006 for treatment of AA/CAA paid with WDP

• War widow’s pension - but see 8.046 for war Widow’s Special Payments

Overall disregard

8.022 Where more than one payment qualifies for a £10 disregard, the amount disregarded overall is £10. The only exception is where 2 or more payments, which were due to be paid and therefore taken into account in different weeks, are in fact taken into account in the same week because it was not practical to take them into account for the weeks in which they were due to be paid.

Schedule 3 para 31

War disablement pension

8.023 War disablement pension may include various additions and increases. Disregard £10 of the total amount. CAA may also be in addition to any disregard which may be appropriate on CAA which may also be paid with war disablement pension - see 3.014 and 8.006 for treatment of AA and CAA.

Other disregarded sums

8.024 Varying amounts are disregarded from the following types of income:

• Occupational pensions, personal pensions and payments from retirement annuity contracts (8.024A)

• Certain charitable payments (8.054)

• Annuity income from a home income plan (8.025)

• Income from sub-letting (8.031)

• Mortgage protection insurance policies (8.033)

• Income from certain disregarded capital (8.037)

Occupational pensions

8.024A Where a resident is in receipt of an occupational pension, personal pension or payment from a retirement annuity contract and has a spouse who is not living in the same residential care or nursing home, 50 per cent of the occupational pension, personal pension, or retirement annuity contract payment should be disregarded providing the resident passes 50 per cent on to his spouse. If the resident passes less than 50 per cent of any of these payments, or none of them, to his spouse, for whatever reason, then the disregard should not be applied and the full amount of pension in payment to the resident should be taken into account. The only other time when 50 per cent of any of the payments a married resident should cease to be disregarded is on death of the spouse or divorce.

Schedule 3 para 10A

8.024B Where an unmarried partner rather than a spouse is involved, the LA should consider their discretionary powers to vary the PEA (see 5.005). This requirement to disregard 50 per cent of the occupational pension does not alter the LA’s discretion to vary the PEA in special circumstances (see 5.005).

8.024C Where a spouse is legally entitled to receive part of the occupational, personal pension or retirement annuity contract (eg by means of a Court Order) that part of the pension does not belong to the resident and should, therefore, not form part of his income. Of the occupational pension actually in payment to the resident 50 per cent should be disregarded in accordance with 8.024A.

Annuity income from home income plan

8.025 There are different types of annuity plans (see paragraphs 8.013 to 8.014). Although income from an annuity is normally taken fully into account, this general rule does not apply to "home income plans". Under these schemes, a retired person who owns his home obtains a loan secured on the property. He uses part of the loan (or all of it) to buy an annuity which provides an income. He may also have used part of the loan for other purposes, for example improving or extending the property. The gross income from the annuity covers the interest payments on the original loan and provides an income for the person.

8.026 In order to qualify for any disregard on the income from a home income plan, one of the annuitants must still be occupying the dwelling as his home. This might happen where a couple have a joint annuity secured on the home, and one partner continues to occupy the home when the other moves permanently to a residential care or nursing home. In these circumstances, if the partner at home receives all the income and makes full repayments on the loan, it will probably be appropriate to treat the income as possessed by the partner at home. In this case, consider the question of liability of relatives - see Section 11.

8.027 Where neither the resident nor any other annuitant occupies the dwelling as his home, no disregard can be allowed on the income. When a single person moves permanently to a residential care or nursing home, therefore, and ceases to occupy the dwelling on which the loan is secured as his home, there will be no disregard on the income from the annuity. In these circumstances the property may be sold, and the loan repaid. Consider whether to take the value of the property into account as capital under the provisions in Section 7. Where the property is taken into account, the amount of the loan secured on the property will fall to be deducted in calculating the value.

8.028 Where a resident receives income from a home income plan annuity, and a joint annuitant continues to occupy the property, specified amounts can be disregarded from the gross weekly income, but only where certain conditions are satisfied (see paragraph 8.029). The amounts which may be disregarded are:

a) the net weekly interest on the loan where income tax is deductible from the interest; or

b) the gross interest on the loan in any other case.

8.029 The conditions to be satisfied before any amount may be disregarded from the weekly income are:

a) the loan must have been made as part of a scheme which required that at least 90% of that loan be used to purchase the annuity; and

b) the annuity ends with the life of the person who obtained the loan, or where there are two or more annuitants (including the person who obtained the loan), with the life of the last surviving annuitant; and

c) the person who obtained the loan or one of the other annuitants is liable to pay the interest on the loan; and

d) the person who obtained the loan (or each of the annuitants where there are more than one), must have reached the age of 65 at the time the loan was made; and

e) the loan was secured on a dwelling in Great Britain and the person who obtained the loan (or one of the other annuitants) owns an estate or interest in that dwelling; and

f) the person who obtained the loan or one of the other annuitants occupies the dwelling as his home at the time the interest is paid.

8.030 Where the resident is using part of the annuity income to repay the loan, disregard the amount he pays as interest on the loan. Under some schemes, the capital is not repaid until the person dies or the annuity ends. In this case the payments the person makes on the loan will be interest only. If the resident qualifies for tax relief on the interest he pays, disregard the net interest paid. Otherwise, disregard the gross interest.

Schedule 3 para 12

Income from sub-letting

8.031 Income from sub-letting (whether paid by the sub-tenant or a third party) carries a disregard only where the resident occupies the dwelling of which part is sub-let as his home. This will therefore apply only to assessing a temporary resident. The disregard is shown in Annex A. See also paragraph 8.017 for income from sub-letting part of the property which is not part of the living accommodation, eg garage or garden).

Schedule 3 para 12

Income from boarders

8.032 A boarder is someone for whom at least one cooked meal is provided. Where a resident has income from a boarder (whether paid by the boarder or a third party) the first £20 of the income should be ignored plus half of any balance over £20.

Example

A temporary resident receives £50 per week as income from a boarder living in his previous dwelling. The first £20 is ignored plus half of the remaining £30 (ie £15) making a total of £35 of the £50 to be ignored.

Schedule 3 para 13

Mortgage protection insurance policies

8.033 Any income from an insurance policy is normally taken into account. However, this does not apply to income from mortgage protection polices. A mortgage protection policy is one which is taken out:

a) to insure against the risk of not being able to make repayments on a loan; or

b) to protect the premiums payable on an endowment policy where the policy is held as security for a loan.

8.034 The income from these policies qualifies for a disregard only where the purpose of the loan is:

a) to acquire an interest in the dwelling occupied as the home; or

b) for repairs or improvements to the dwelling occupied as the home.

8.035 The income from the policy must be being used to meet the repayments on the loan.

8.036 The amount of income from such a policy which should be disregarded is the weekly sum of:

a) the amount which covers the interest on the loan; plus

b) the amount of the repayment which reduces the capital outstanding; plus

c) the amount of the premium due on the policy.

Schedule 3 para 19

It should be remembered that Income Support may be adjusted to take account of the income from the policy, so income previously disregarded under 3.009 or 8.040 may no longer be in payment.

Income From Certain Disregarded Capital

8.037 Where income is received from certain property of which the capital value is being disregarded (see 8.015), the income should be taken into account in full less any mortgage repayments, or payments of Water rates or payments of Council Tax made during the same period as that in respect of which the income was received.

Schedule 3 para 14

Income fully disregarded

8.038 The following types of income are fully disregarded:

• See 3.014 for the treatment of AA and DLA (Care) for temporary residents and 8.006 for permanent residents

• That part of an Income Support award which is paid in respect of home commitments for temporary residents (8.039)

• Certain charitable and voluntary payments (8.056)

• Child Support Maintenance Payments and Child Benefit unless the child is accommodated with the resident under Part III of the National Assistance Act 1948

• Christmas bonus (8.041)

• Any payment from:

• the Macfarlane Trust

• the Macfarlane (Special Payments) Trust

• the Macfarlane (Special Payments) (No 2) Trust

• the Fund (payments to haemophiliacs infected with HIV)

• the Eileen Trust

• the Independent Living (Extension Fund)

• the Independent Living (1993) Fund (8.042)

• Council Tax Benefit

• Disability Living Allowance (Mobility Component) and

• Mobility supplement

• Dependency increases paid with certain benefits (8.042A)

• Gallantry awards (8.043)

• Income frozen abroad (8.044)

• Income in kind (8.045)

• Social Fund payments

• War widows special payments (8.046)

• Work expenses paid by employer, and expenses paid to voluntary workers (8.049 and 8.050)

Income Support paid for home commitments

8.039 Under the Income Support rules, an amount may be included in the award of Income Support in respect of specified expenses to maintain the home address. Payment may continue for up to 52 weeks.

8.040 Any Income Support a resident receives is normally taken into account in full in assessing the charge. However, where the award includes an amount for home commitments, that part of the Income Support award is fully disregarded. The amount awarded for home commitments is shown as a separate entry on form A14N (clerical) or computer produced Award Calculation Sheet which the Benefits Agency sends to the resident. If the form is not available, ask the Benefits Agency office to identify the amount.

Schedule 3 para 26

Christmas Bonus

8.041 A Christmas Bonus is paid each year in the week starting the first Monday in December. It is paid to people who are entitled to specified benefits, for example:

• Attendance Allowance;

• Retirement Pension;

• Widow's and War Widow's Pensions;

• War Disablement Pension;

• Incapacity Benefit or Severe Disablement Pension;

• the Christmas bonus is fully disregarded in assessing the charge.

Schedule 3 para 22

Payments from any of the Macfarlane Trusts, The Fund or the Independent Living Funds

8.042 Payments from the Macfarlane Trust, the Macfarlane (Special Payments) Trust, the Macfarlane (Special Payments) (No 2) Trust, the Eileen Trust, the Fund, the Independent Living (Extension) Fund or the Independent Living (1993) Fund do not have to be declared if they are kept in a separate bank or building society account from the resident's other resources. All payments are fully disregarded.

Schedule 3 para 24

Dependency increases paid with certain benefits

8.042A Dependency increases for adults can be paid with Unemployment Benefit, Maternity Allowance, Incapacity Benefit, Severe Disablement Allowance, Retirement Pension, Invalid Care Allowance and Unemployability Supplement paid with Industrial Injuries Disablement Benefit. Child Dependency Increases can be paid with Jobseekers Allowance (where the beneficiary has reached pension age), Incapacity Benefit, Severe Disablement Allowance, Retirement Pension, Invalid Care Allowance and Unemployability Supplement (as above). Where the dependent does not live with the resident, the increase will only be payable if the

resident pays over at least the amount of the increase to the dependent. Where the increase is being paid over to the dependent, the amount of the increase should be disregarded in full.

Schedule 3 para 28B

Gallantry awards

8.043 Gallantry awards are:

• Victoria Cross Annuities

• George Cross Annuities

• analogous awards eg one from another country

Schedule 3 para 8

These payments are fully disregarded.

Income frozen abroad

8.044 Income paid outside the UK which cannot be transferred to the UK should be fully disregarded so long as it continues to be frozen outside the UK.

Schedule 3 para 16

Income in kind

8.045 Income in kind means income received in the form of food, clothing, cigarettes, etc. The value of such income is disregarded in full.

Schedule 3 para 14

Payments made to trainees

8.045A Trainees on certain employment schemes may receive a training premium and reimbursement of travelling expenses. These should be fully disregarded. The actual training allowance should be taken into account.

War widows special payments

8.046 War widows special payments are made to the widows of men who died from injuries or illness which resulted from service ending before 31 March 1973. The special payments are intended to compensate those widows who did not benefit from the amendments to the Armed Forces Pension Scheme. These payments, which are made under the legislation listed in Annex F, are fully disregarded.

8.047 A small number of widows do not qualify for the normal UK widows pension, even though their circumstances are such that they might expect to do so. In these cases, ex-gratia payments are made at the same rate as the appropriate war widows

benefit. Because they do not qualify for war widow's pensions under the normal rules, they are also excluded from the war widow's special payments scheme. The Secretary of State for Defence may therefore make special payments which are analogous to those listed above (paragraph 8.046). Such payments are fully disregarded in the assessment.

8.048 War widows special payments and analogous payments can normally be identified by the amount contained in the war widow's pension order book. In cases of doubt, contact the DSS War Pensions Office, at Norcross, Blackpool FY5 3TA (Tel: 0253-856123). They will need to know the name and reference number (shown on the pension book) of the war widow.

Schedule 3 para 25

Work expenses paid by employer

8.049 Where a person who is in paid employment receives a payment from the employer in respect of expenses which are incurred in the course of the employment that payment is fully disregarded. The payments must be for expenses incurred exclusively and necessarily in the course of work.

Schedule 3 para 3

Expenses paid to voluntary workers

8.050 Where a person works for a charitable or voluntary body or as a volunteer, and receives no other payment as a result of the employment, any payment in respect of expenses which are actually incurred is fully disregarded.

Schedule 3 para 2

Charitable and voluntary payments

General

8.051 A charitable payment is not necessarily one made by a recognised charity, but may include payments made from charitable motives. A voluntary payment is one which the payer is under no legal obligation to make.

8.052 A charitable or voluntary payment which is not made regularly and is not due to be made regularly is treated as capital.

Reg 22(7)8.053

8.053 Payments which are made regularly or due to be made regularly are either:

a) subject to a £20 disregard; or

b) fully disregarded

£20 disregard

8.054 Disregard £20 of any charitable or voluntary payment if it is intended and used for any item which is already covered by the local authority contract with the home, eg food or heating, subject to the overall disregard mentioned at 8.022.

8.055 Disregard £20 of any other payment which is not intended for any specific item subject to the overall disregard mentioned at 8.022.

Schedule 3 para 10(1)

Full disregard

8.056 A payment which is intended and used to pay for a specific item which is not covered by the home's fees should be fully disregarded. For example, a payment to

enable the resident to have his own telephone or television, or for a weekly outing which is not paid for under the terms of the contract.

Schedule 3 para 10(2)

Payments to meet higher fees

8.057 Special rules apply to charitable or voluntary payments which are intended and used to meet a home's fees where the fees for that home are higher than the amount the local authority would normally pay. These payments are intended to allow the resident some freedom of choice about where they wish to live. See paragraphs 8.018-8.019.

Schedule 3 para 29(6)

Income treated as capital

8.058 Certain forms of income are treated as capital - see 6.038 to 6.045 for details

Reg 22

Notional Income

8.059 A resident may be treated as having an income which he does not actually receive in a variety of situations. Such income is described as notional income and may be:

a. income which is paid to the local authority by a third party under an agreement to contribute towards the fees of a home.

b. income which would be available on application

c. income which is due but has not yet been paid

d. income which the resident has disposed of

Guidance on the factors to be considered is in the following paragraphs.

Reg 17

Actual and notional income

8.060 If the resident's actual income is such that the full charge is assessed as being paid it will not be necessary to consider the question of notional income.

Treatment of notional income

8.061 Notional income is calculated and treated in the same way as actual income.

Payments to the local authority by a third party

8.062 Where a third party is making a contribution towards the cost of the accommodation, the amount the third party is paying should be treated as the notional income of the resident. This is to ensure that the local authority take the money into account when assessing the charge.

8.062A Where a third party makes a payment directly to the local authority in respect of a resident's arrears of charges for residential accommodation it should not be treated as the resident's notional income and will not therefore need to be taken into account as available towards the resident's current charge. In order to avoid the payment being regarded as the resident's capital (see 6.044A), it is recommended that, where a single payment or a series of payments are offered by a third party to help clear arrears, arrangements are made for the payment to go directly to the local authority.

8.063 The remaining forms of notional income depend on the local authority being satisfied that the resident has deprived himself of that income in order to reduce the charge payable for his accommodation.

Income available on application

General

8.064 Subject to certain exemptions, income which the local authority is satisfied would be available to the resident if an application were made, but which has not yet been acquired, is to be treated as belonging to that resident.

Reg 17(2)

Amount of income

8.065 Payments of the following cannot be taken into account as notional income:

1. income payable under a discretionary trust

2. income payable under a trust derived from a payment made in consequence of a personal injury

3. Family Credit

4. Disability Working Allowance

Also income which would be fully disregarded should not be included as notional income, for example Housing Benefit, Dlocal authority (mobility) and refund of income tax.

8.066 Income which is subject to the awarding authority's discretion, ie the resident has no right to payment shall also not be taken into account.

Reg 17(2)

8.067 Any potential entitlement to Severe Disablement Allowance should not be taken into account. This is because entitlement to this benefit is based on medical conditions which the local authority can not assume are satisfied.

Reg 17(2)

8.068 All other income should be considered. Examples of income which may be treated as belonging to the claimant are

1. unclaimed councillors attendance allowance

2. unclaimed Social Security benefits (but not Unemployment Benefit for someone not required to be available for work, One Parent Benefit or Severe Disablement Allowance).

3. occupational pension not claimed.

Date taken into account

8.069 The income should be taken into account from the date it could be expected to be acquired if an application was made. In considering the earliest date that account can be taken of the income the local authority should:

1. assume the application was made on the date the local authority first became aware of the possible income; and

2. take into account any time limits which might limit the period the period of arrears.

Reg 17(2)

Examples

1. A resident aged 69 is not receiving a retirement pension to which he would have been entitled had he applied. The local authority becomes aware of the possible entitlement on 30/9/93. As retirement pension can only be backdated a year from date of claim the local authority only take it into account as income from 1/10/92.

2. The local authority become aware that a resident aged 64 is not receiving an occupational pension to which he would have been entitled from the age of 60. On his 65th birthday his former employers state that he will be paid all the pension due from age 60. The local authority should take the pension into account from age 60.

Personal Pensions and Retirement Annuity Contracts

8.069A Where a resident, aged 60 or over, has a personal pension plan and he has not purchased an annuity, or arranged to draw the maximum income available from the

plan, notional income should be assumed in the assessment of charges. This assumption should also apply to Retirement Annuity Contracts from which income can be derived from age 60 by the purchase of an annuity. The Benefits Agency will contact the pension provider for details of the income which could be payable where Income Support is claimed. For IS claimants LAs should liaise with the Benefits Agency to obtain details. Where no IS is claimed the LA will need to seek the resident’s permission to approach the pension provider to obtain details which could be received. This notional income should then be taken into account in the assessment of charges. The assumption of notional income from personal pensions and Retirement Annuity Contracts only applies to residents aged 60 or over. Reg 17(2)

Income due but not paid

8.070 Any income which is due to a resident, but which has not been paid, is to be treated as belonging to the resident. This does not apply to

1. income payable under a discretionary trust

2. income payable under a trust derived from a payment made in consequence of a personal injury

3. occupational pension which is not being paid, because:

a. the trustees or managers of the scheme have suspended or ceased payments due to insufficiency of resources, or

b. the trustees or managers of the scheme have insufficient resources available to them to meet in full the scheme's liabilities.

Reg 17(2)

8.070A Examples of where to take into account income which is due to the resident, but which has not been paid are:

1. superannuation or other income due but not yet paid (for example, because of a strike by pay clerks)

2. pension or grant which has ceased temporarily, for example due to a postal strike.

Deprivation of income

8.071 A resident is to be treated as possessing income of which he has deprived himself for the purpose of paying a reduced charge.

Reg 17(1)

Example

A resident is assessed as having to pay the full charge based on his income from retirement pension and occupational pension. When reviewing the charge the local authority find that he has sold his right to receive the occupational pension thereby reducing the charge he is assessed as having to pay. The local authority decides that this was done for the purpose of reducing the charge and the occupational pension was taken into account.

Meaning of deprive

8.072 A person will have deprived himself of a resource if, as a result of his own act, he ceases to possess that resource.

Questions for consideration

8.073 Where the resident appears to have deprived himself of income the local authority should consider the following paragraphs:

Was it the resident's income?

8.074 Where a person, before he deprived himself of an income, was in receipt of that income it is reasonable to assume that the resource belonged to him. Sometimes there will be other evidence such as a letter or documentation which shows that the income was properly payable to the resident.

Has deprivation occurred?

8.075 Deprivation will have occurred if a person relinquishes, or transfers to another person, an income which:

1. he has been receiving or was due to receive and:

2. would have continued to receive had he not relinquished or transferred it.

8.076 It is up to the resident to prove that he no longer has the income. If he cannot prove that the income has been disposed of the local authority should treat the resident as still possessing the actual income.

Purpose of the disposal of income

8.077 There may have been more than one purpose of the disposal of income only one of which is to avoid a charge, or a lower charge. This may not be the resident's main motive but it must be a significant one.

Timing of the disposal of income

8.078 Consideration should be given to the timing of the disposal of the asset when deciding whether the purpose of disposing of the asset was to avoid a charge for the accommodation.

8.079 The local authority should make a judgement as to the purpose of the disposal of income only after balancing all the person's motives, explicit and implicit, and the timing behind the action. The local authority should bear in mind, however, that deprivation can be considered for resources disposed of at any time. The 6 month

restriction only applies to using the provisions of section 21 of the Health and Social Services and Social Adjudication Act 1983.

Conversion of income to a capital asset

8.080 Where, for the purposes of paying a reduced charge or no charge, the right to receive an income resource has been sold, and therefore converted from income to a capital asset, the local authority should consider taking account of:

1. the amount of the former income resource or

2. if the newly acquired capital gives rise to a tariff income or an increase in tariff income, the difference between the former income resource and the tariff income, or the increase in tariff income, arising from that capital asset.

Examples

1. A resident sold the right to receive an income under an annuity of £10 per week for £2800. Having no other capital the £2800 did not affect the resident's assessment of charges. The local authority decided that the resident sold the right to receive the income for the purpose of reducing his assessed charge and treated the resident as receiving £10 per week notional income.

2. A resident sold the right to receive income under an annuity of £10 per week for £2,800. The resident's other capital was £8,550 and so the total capital of £11,350 produced a tariff income of £6 per week. The LA decided that the resident

had sold the right to receive the income for the purpose of reducing his assessed charge and treated the resident as notionally receiving the £4 difference between the tariff income and the original £10, per week from the annuity.

3. A resident sold the right to receive income under an annuity of £10 per week for £2,000. The resident's other capital of £10,100 produced a tariff income of £1 per week. The LA decided that the resident had sold the right to receive the income for the purpose of reducing the assessed charge. An extra tariff income of £8 would have resulted from the sale of the right to receive an income (ie £2,000 ÷ £250). A notional income of £2 per week was calculated by deducting the increase in tariff income (£8) from the original income payable under the annuity (£10).

Deprivation decided

8.081 If it is decided that the resident has disposed of income in order to avoid a charge or to reduce the charge payable, the local authority will need to assess the charge payable using the resident's notional income.

Reg 17(1)

8.082 If the resident is unable to pay the charge assessed using the notional income, the local authority should consider whether the provisions of the Health and Social Services and Social Security Adjudications Act 1983 can be used to transfer the liability for that part of the charges assessed as a result of the notional income to the person to whom the income has been passed. (see separate guidance).